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RESEARCH PROJECT ON

VENDOR EVALUATION FROM THE BUYERS PERSPECTIVE

PRESENTED BY JIAUL HAQUE MFT-IV NIFT BANGALORE Batch: 2007-2009

2009

Jiaul Haque Email id: jiaul.maku@gmail.com

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INTRODUCTION

The concept of retail business has changed from the manufacturer driven to customer driven. Buying house are playing a vital role in this global purchasing environment to deliver the right product, at right place, at right price, in right quantities and qualities at right time with right Manufacturing Process with maintaining proper social compliance. So its an utmost importance to the buyer to evaluate and select vendors, and structuring the vendor base to fulfil the customer requirements.

2009

Jiaul Haque Email id: jiaul.maku@gmail.com

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OBJECTIVES: To establish an efficient vendor evaluation framework for the buying house. SUB-OBJECTIVE: To study the current vendor evaluation system in Decathlon. Critically analyse the present evaluation procedure and to study the present vendor evaluation system in other buying organization. To Design a Vendor Evaluation framework for the Buying House.
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METHODOLOGY
Study the literature available on vendor evaluation system. Study the current vendor evaluation stages at Decathlon Study the current system of vendor evaluation followed by the buying house. Critically analyze the current system. Study the other various criteria present to perform vendor evaluation. Suggest changes if needed, and implement the same or design or develop a new evaluation framework which is more effective and efficient. Analyse the new Evaluation Framework.

2009

Jiaul Haque Email id: jiaul.maku@gmail.com

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VENDOR SELECTION AND EVALUATION PROCESS Assessing own sourcing needs. Identify key sourcing requirement Determine Supplier Sourcing strategy Identify potential supply source Preliminary evaluation of Potential Vendors Determine method of supplier evaluation and selection Select supplier
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METHODS FOR EVALUATION OF VENDORS

1. Weighted rating method 2. Single most important criterion method 3. Minimum cut-off method

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WEIGHTED RATING METHOD Criteria selection Criteria weighting Supplier selection Supplier rating Weighted rating

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ELEMENTS OF VENDOR EVALUATION SYSTEM

1. Overall score 2. Main criteria 3. Sub criteria 4. Scoring range 5. Weighting of score

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Jiaul Haque Email id: jiaul.maku@gmail.com

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NEW VENDOR EVALUATION STAGES AT DECATHLON


Determine sourcing needs in terms of product family, style, quantity per year Informing different production country about the sourcing needs If sourcing need exceeds existing supplier capacity Determine the desired target suppliers in terms of capacity, schedule etc. Collection of New Vendor addresses The suppler list is narrowed down Supplier Visit and Supplier Evaluation Form Fill-up Meeting with the desired target capacity
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Supplier price quotation
Supplier Pricing Policy matching

Perform Supplier Quality and Social Audits

Contract Agreements and Trial Run

First Mass Production Order Placement

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Jiaul Haque Email id: jiaul.maku@gmail.com

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DECATHLON NEW SUPPLIER EVALUATION PARAMETERS (SUPPLIER EVALUATION FORM):

EXISTING NEW SUPPLIER EVALUATION FORM

2009

Jiaul Haque Email id: jiaul.maku@gmail.com

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CRITICAL ANALYSIS OF THE PRESENT VENDOR EVALUATION FORM


All the parameters are not well defined. The parameters in evaluation form are more subjective rather than objective. The final decision is taken by doing the SWOT analysis of the buyer without having any exact figure of evaluation score. No scope of comparing the required capacity of supplier that is looking for with the supplier that is now being evaluated. Also less importance is given on the pricing strategy, level of pricing etc. during evaluation, though they have one more stage of pricing. Here there is no systematic way to evaluate all the parameters and get a cumulative score marks after the evaluation is done. No information are collected about the type of organization IS a vertically integrated or not and from where do the source their raw material like, fabrics, trims & accessories and about their supplier evaluation system.
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OTHER VARIOUS PARAMETERS THAT CAN BE INCLUDED IN VENDOR EVALUATION FORM

The history of the establishment regarding delivery issue Delivery on time percentage Quantity reliability Respect to Compliance with shipping instructions (GTD) Quality Non quality cost rate Quality performance of deliveries Problem solving Complaint/Rejection level

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Commercial
Follow-up commercial (events of prod, of delivery, delay for the requests)

Purchasing
Sourcing process Subcontractor performance

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Conception Development
Specific know-how Number of new products or solution proposed per year Design office or development capacity Number of prototype done to get the right one as per order Time to get first prototype (in days)

Competence
Industrial engineering Customer support and communication Electronic communication Merchandising setup

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Production Flow
Flexibility of the organization to accept the variation in order quantity with respect to the given forecasted quantity. Production quality- no of quality problem in last year.

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NEW SUPPLIER EVALUATION FRAMEWORK There are three stages of documentation for vendor evaluation. These three document to be completed to complete vendor evaluation. These are 1. Target Supplier evaluation minimum criteria information Form 2. Supplier Introduction Framework 3. Supplier Evaluation Framework. I. Changeable Framework Parameters:

II. Final Evaluation Framework:

NEW SUPPLIER EVALUATION FRAMEWORK


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Supplier Overall Score Measurement


The supplier overall score is measured in percentage by using weighted rating method. The main criteria and their percentage weight assigned are

Sl No 1 2 3 4 5 6 7 8 9 10

MAIN CRITERIA Conception - development Design - development Production - flow Quality Commercial Financial aspects & generalities Production Process Pricing policy Desirability Other productionJiaul Haque Email id: facility jiaul.maku@gmail.com Total

PERCENTAGE WEIGHT 15 26 12 4.5 4.5 5 14 10 3 6 100

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OVERALL SCORE CALCULATION:


Scoring Range and Grade Points: Scoring Range High Medium Low Grade Points 4 2 0

Overall Score Calculation: Each parameter weighting score= (% weight*Grade Point)/4 Final Performance of the supplier is expressed by adding all the individual parameters weighted score. It is expressed as percentage.

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ANALYSIS OF NEW SUPPLIER EVALUATION FRAMEWORK


All the parameters in new evaluation frameworks are in objective form rather than subjective form in the old evaluation framework. Through this framework number of supplier can be compared on the same parameters with overall score. Here all the parameters are well defined to categorize in three grades, High, Medium, Low. All the main criteria and sub-criteria are well categorized. From this framework we can have a numeric value of the overall score which helps to take decisions.
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Continue
This format can be fitted for the evaluation of any target capacity suppliers and all the categorization of high, medium; low can be defined as per the requirements of the buyers. Through this evaluation framework many figures can be co-related to compare many of suppliers. As all the parameters are more elaborately defined it will take less time to perform vendor evaluation. Less skilled professional will be able to perform the vendor evaluation trough this framework. Here the evaluator has a clear idea about requirements of the necessary infrastructure of the supplier.

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Jiaul Haque Email id: jiaul.maku@gmail.com

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THANK YOU!!!

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